Despite the billions spent on aid, there is no proof that it leads to economic
growth, writes Ruth Porter.

Brazil’s move above the UK in the world’s latest economic rankings has produced a predictable outcry about the fact that we still give the country aid at all. As lives are at stake, though, the issue surely deserves a slightly more thoughtful response. At a time when it is estimated that more than 9 million children die each year from largely preventable causes we have a moral duty to do everything in our power to help them.

Over the course of this Parliament the Government will spend more than £50bn on foreign aid and development. When we are spending at a rate we cannot afford and are having to make cuts to Government spending, the argument is made that we should therefore cut this area of the budget. Such brutal selfishness should be dismissed: the pertinent question is surely not whether we can afford to help, but how we can best help. It seems ridiculous that we can still believe that aid is the answer.

Take some of the more controversial of countries to have received money in recent years – China, Brazil and India. These places have been hugely successful; formerly termed "emerging economies", they now loom as potential giants. In many ways western economies are right to envy their position. But all is not well. The abject poverty in these places is appalling. Living lives we cannot bear to imagine, millions of people struggle to survive with no access to basic shelter, healthcare, education or clean water. How is this possible?

We pour in aid thinking somehow this will solve the problem. Ironically we make it worse, entrenching the structures and systems which create the hurdles that prevent the development of local infrastructure and a means out of poverty. We distort local markets with the money we plough in.

In the poorest and most corrupt countries the consequences of our good intentions are often even worse. We allow corrupt and brutal regimes to flourish. In some terrible cases we may even have ended up financing weapons for leaders to use against their own people.

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It should be little wonder then that there is no link between aid and economic growth.

To date we have been woefully lacking in imagination when it comes to considering how we help other countries. We go round and round with each new government displaying the same hubris as the last believing they can stamp out the scandals associated with aid expenditure. Inevitably they fail. We continue to mindlessly focus on outcomes as if somehow by ensuring we spend that magic figure of 0.7 per cent of GDP we will have achieved something, instead of measuring our achievement against concrete outcome based objectives.

We need to thoughtfully consider where we should go from here and learn the lessons from having tried and failed so miserably in the past. We need a radically different approach.

For instance, reduce the aid and development budget dramatically. Perhaps set aside instead an emergency fund that the government draws from to make donations to countries for disaster relief. Then focus our efforts on helping to create an environment that fosters the reform of structures within countries so that opportunity is there for all. Instead of distorting local markets and crowding out local business and social entrepreneurial activity, what if we became leading advocates of free trade? We could start on our own doorstep – abolishing CAP and its counterproductive farm subsidies and getting rid of the myriad of environmental regulation that has a stranglehold on the development of new technologies. This would make food production cheaper and easier, offering hope to millions in stricken parts of the world. Through pursuing the abolition of import tariffs and quotas we could be a force for good in the world, delivering for the poor on the scale Wilberforce delivered for those trapped in slavery.

Where aid is appropriate we should be using natural and effective accountability by cutting taxes and encouraging people to donate to charities directly, rather than governments. One of the most extraordinary things about this debate is the notion that somehow by giving 0.7 per cent of GDP a year in aid and development we are being compassionate. Britain may be a generous nation in the sense that a high proportion of our population gives to charity, but the amounts are paltry – around £30 per person, per month and only a fraction of this goes to those in other countries.

It is time we asked ourselves some hard questions when it comes to how we approach the world’s poorest countries. Although as it happens this may mean a substantial cut in the government’s budget for aid, our motivation should be focused on what will help them, not on what will save us money.